Mexico doesn't recognize U.S. auto insurance, so you should not cross into the country with only your U.S. insurance. Moreover, U.S. insurance companies might not extend coverage into Mexico; the insurance might not work as it does in the U.S. Below are specific things you should know about driving with U.S. car insurance in Mexico.
Liability Coverage Typically Ends at the Border
Many insurance carriers limit coverage for drivers who cross into Mexico. Many carriers extend collision and comprehensive coverage south of the border but not liability coverage. If that is the case with your carrier, they may compensate you for your car's damage or theft.
However, the carrier will not compensate those who file liability claims against you, such as victims of accidents you might cause. As such, the Mexican authorities will treat you as though you don't have car insurance. Thus, you must buy Mexican insurance to comply with the country's laws.
The Coverage Rarely Extends to Rental Cars
American insurance policies typically extend to rental cars. However, the extension might not apply once you cross into Mexico. Thus, you might have to repair damage to your rental car out of pocket if you don't buy coverage applicable in Mexico.
Different Restrictions Apply
Even if your car insurance company extends your coverage to Mexico, it may restrict the coverage differently. For one, insurance companies usually restrict the extension to brief visits, such as vacations. Thus, you need Mexican car insurance if you plan an extended stay in the country.
Secondly, your insurance company may restrict how far into Mexico you can drive with your U.S. insurance. The rationale is that the further you drive into the country, the more the risks change. Insurance is all about risks; insurance companies rarely cover risks they do not understand.
Border States Usually Have Preferential Treatment
As a rule, insurance issues vary a lot by company and location. For example, insurance companies operating in the border states better understand the risks drivers face in Mexico than companies that don't operate in those states. After all, drivers within the border states are more likely to cross into Mexico than others.
Thus, insurance companies with clients sometimes have different allowances for drivers in the border states. Call your insurance company or agent for more information before driving with your U.S. insurance into Mexico.
You don't have to buy your car insurance in Mexico if you are visiting the country. Some U.S. insurance companies work with Mexican insurance companies. Such companies will provide you with coverage on behalf of their Mexican counterparts.
For more information, reach out to an auto insurance company near you.